2.

Jaycie Phelps, Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski, Inc. on

January 1, 2007. The purchase price was $1,200,000.00 for 50,000 shares. Kulikowski Inc. declared

and paid an $0.85 per share cash dividend on June 30 and on December 31, 2007. Kulikowski

reported net income of 730,000.00 for 2007. The fair value of Kulikowski's stock was $27.00 per share

at December 31, 2007.

Complete all of the applicable entries for 2007.

(check figure: Investment of Kulikowski account after all transactions = 1,261,000.00)

Assume that this same transaction only gives Jaycie Phelps, Inc. a 17% ownership.

Complete all of the applicable entries for 2007.

(check figure: net value of Kulikowski after all transactions = 1,350,000.00)